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FTC Warns Hotels About Hidden Fees

The Federal Trade Commission (FTC) has warned 22 hotel operators that they may be violating the law in providing deceptively low estimates of room rates. Mandatory surcharges such as resort fees are not clearly included in price quotes consumers find on hotel reservation web sites.

The FTC sent the 22 hotel organizations a strongly worded letter in late November 2012 based on complaints it had received from hotel guests, Meetings and Conventions magazine recently reported. Consumers complained that they were not aware that they would be required to pay mandatory fees—often called “resort fees”—for such amenities as newspapers, Internet access, and exercise and pool facilities. These charges can be as high as $30 per night, an amount, the FTC letter said, that could “certainly affect consumer pricing decisions,” according to Meetings and Conventions.

Fees and surcharges are lucrative for the hospitality industry. In an August 2012 report, Dr. Bjorn Hanson, dean of the Tisch Center for Hospitality, Tourism and Sports Management at New York University estimated that U.S. hotels would collect about $1.95 billion in fees for 2012, with resort fees representing less than half the total.

At issue for the FTC is that any mandatory fees should be clearly shown in the total room price. After reviewing a number of hotel reservation sites, the FTC concluded that some hotels hide resort fees or do not identify them at all. Dean Hanson of the Tisch Center noted that it’s been a burden on consumers to find the fees, adding that while he does not believe this was an attempt to defraud consumers, “I do think it has been complicated, in an area where consumers didn’t expect things to be complicated.”

A staff attorney for the FTC Bureau of Consumer Protection told Meetings and Conventions that the FTC will work with the hotel operators to make the changes the FTC believes necessary, namely, “including all the mandatory fees in the total price.”